After creating a ZFS storage pool, encryption can be enabled on it.
sudo zfs create -o encryption=on -o keylocation=prompt -o keyformat=passphrase testpool/encrypted
NOTE: You will be asked to enter the passphrase twice.
NOTE: A new directory will be created under the storage mount point and anything under this directory will be encrypted.
sudo zfs mount -l testpool/encrypted
df -hT | grep zfs